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Determining if there is a need for life insurance is the first step in thinking through a plan.  Many financial experts say we need ten times our income in life insurance protections.  However, some people who make your same income have more debt than you and some have less, so we use a “needs analysis”. This helps you be certain that you have enough coverage to pay off debt and replace income, but do not pay for more coverage than you need.  Sometimes having just enough for funeral expenses is enough, but often much more is needed.  The “needs analysis” helps us encourage your next wise move instead of making broad generalizations. 

Is the life insurance I have through my employer enough?

Most employers offer insurance for free or a very small premium, but ask yourself this question, “Do I have any life insurance that I own?”.  The policy you have through an employer is owned by them, so except in rare cases, you cannot take the policy with you when you leave.  Some people want to wait until they leave a group policy to buy their own coverage, but when they think about it closely, that is a big risk.  If you have a heart attack or diabetes and then leave your job, you would be without coverage and without any way to get it.  If there is a need for life insurance, owning your policy is the next wise move.

How often should I update my life insurance policy? 

The need definitely changes as the years go by.  We offer annual reviews and recommend always reviewing life insurance plans every two years.  If income or debt changes, life insurance needs change.

Who should I select as my beneficiaries? 

Selecting the beneficiary is a very personal choice.  Answer this question to guide you: “Who is at risk if they acquire my debt or lose my income?”  Most of the time a spouse is the selected beneficiary.  Many individuals ask to make their children beneficiaries and while this is possible, it is not recommended. A beneficiary should be at least 18 years old to avoid proceeds going through probate.  After a child is 18, an easy change of beneficiary form can be signed to make them the beneficiary.  A simple signed form can change your beneficiary at any time in the event of a spouse’s death, divorce, or any reason the owner of the policy decides.

Should I buy life insurance for children?

Buying life insurance for children can be a wise move for their future.  Because life insurance is needed to pay off debt or replace income, a child’s current need will be low.  As unsettling as it is to think about, final expenses would leave a debt if a child dies, yet they will not have income to replace that debt.  Because permanent life insurance is so inexpensive at a young age, some parents will invest in the child’s future needs by purchasing life insurance today.  If the child had health complications later, the policy purchased at a young age would be the only coverage they could attain.  After a parent secures their own policy, life insurance for a child can be a wise move in some instances.

How important is life insurance? 

Ultimately, the purpose of life insurance is achieved at the time of death.  Recently, I delivered a check to a family of five children who lost both parents in a five-year span.  The uncle of the children sat across from me when I delivered the check the children’s mother planned wisely for them to have.  The uncle said, “this represents hope to these children!”

How does my family benefit from my life insurance policy? 

When death occurs, a family member can call our local office, many times we already know before they call.  In many cases an agent can get up to $10,000 delivered within a few days to relieve the burden of funeral planning.  The rest of the proceeds follow after a death certificate is received.  We make the claims process as stress free as possible, so a family can properly grieve.

Content provided by: J. Casey Ryals Hall County Farm Bureau Agency Manager